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Will Home Depot Kill the Residential Solar Market?
by Chris Williams
Forums are a great way to listen to what industry professionals are talking about, to discover what they still need to learn, and to find out what's on people's minds. SolarPro is my favorite forum for serious solar professionals. It's unbeatable.
One of the concerns that has been thrown around a lot lately from solar contractors is about the future of the residential solar market given Home Depot's entrance into selling solar. The emergence of Westinghouse Solar and Enphase Energy, two companies producing AC modules, has decreased the technical requirement of a system. This begs the question, "Will the entrance of Home Depot, and other big box stores, into the industry negatively affect the future of the residential solar market?"
There are many ways we can look to answer the questions:
Permits: Homeowners may now have more access for buying the products and installing them, but can they pull the required permits? Yes. Homeowners are typically allowed to pull electrical permits and home improvement permits to perform work on their home. Whether they will actually do it remain the question. The answer will depend on a few more variables.
Incentives: Homeowners will be able to purchase solar products and apply for all federal incentives because they are simply tax credits or grants. The question is whether they will be able to reap state benefits. Some states, like Massachusetts, have SREC programs that homeowners can take advantage of. However, some states, like New York and Pennsylvania, require contractors to become "eligible installers" to get state incentives. Due to the licensing and certain state requirements, it would be almost impossible for a homeowner to become eligible in NY or PA.
Insurance: Think of the liability, insurance, and warranty issues that go along with homeowners installing their own solar systems. Who will be responsible for service? Who will take care of repairs of faulty equipment and troubleshooting? Even if they're able to physically install the system, most homeowners will be incapable of insuring the systems reliability.
Comparisons with Other Trades: Here's the reality. Homeowners can also purchase shingles, sinks, windows, and wood at Home Depot. Does this mean that they're going to re-shingle their own roofs, build their own decks, and install their windows? I think not.
There will always be a small number of DIYs that will do the work themselves, but it won't likely reach the mass market.
Power Purchase Agreements: The solar industry has exploded with the introduction of Solar PPAs on the residential and commercial sectors. A lot of homeowners simply can't install solar without utilizing a power purchase agreement. Most PPA firms will only work with established companies due to legal, warranty, and quality issues. They will not work directly with homeowners. This is a big deterrent to self-installation.
Here are two more questions to consider when analyzing how the entrance of big box stores will affect the market:
Is it cheaper?
Let's assume that homeowners can buy a complete solar package (inverter, racking, balance of systems, and solar panels) at Lowes. Would they want to? Regarding the Andalay Sytstem, Lowe's is charging $893 per AC panel (it's a Suntech 175W with and Enphase inverter). That figures out to a cost of $5.10 per watt, just for the materials. This cost does not include labor, permitting and all the other related costs that a homeowner would need to cover. Even if the homeowner completed 100 percent of the labor himself, most respectable contractors can beat this price and still make a profit.
Can Home Depot be a Good Sign?
The major quandary that stood out to me is why contractors see this as a bad thing. Why? I think because most people see Home Depot as low prices and cheap quality, which may or may not be true. However, with Home Depot, Lowe's and other big box names getting into the game, won't that legitimize the industry? Although the vast majority of Americans support greater use of solar, many are still skeptical of it. To gain the support of big brands to the solar campaign, it will only add legitimacy, interest and-better yet-dollars behind this type of renewable energy. You can bet that if Home Depot's solar business starts to go well, they'll put their money behind keeping it that way and expanding into more states. Perhaps this could even spark the creation of more state-based incentive programs and increase demand. The reality is that there is plenty to go around. For example, in New Jersey there have been a total of 5,582 solar installations as of 3/31/2010. That is nothing! New Jersey the second largest market, is growing quickly and doesn't even have 6,000 installations. We haven't even touched the surface. Even if Home Depot gets tons of business, there will be much more work left over for other contractors, especially given a higher demand.
What are your thoughts on the big boxes and major brand entering the solar industry? Good bad, don't care?
Article by Chris Williams who works with HeatSpring Learning Institute delivering world-class IGSHPA Geothermal Training, NABCEP Solar Training, and BPI Certification training to professionals who are installing, designing or selling renewable energy systems. Cleantechies readers can received a 100 percent discount off all HeatSpring courses, both online and offline, with the code "cleantechies". Chris can be reached directly at firstname.lastname@example.org
Reprinted with permission from Cleantechies
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